1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Gala2k [10]
3 years ago
6

A stock with a current market price of $50 and a strike price of $45 has an associated put option priced at $3.50. This put has

an intrinsic value of ______ and a time value of _____.
PLEASE SHOW ALL STEPS, THANK YOU!

A.) $5; $3.50
B.) $3.50; $5
C.) $3.50; $0
D.) $0; $3.50
Business
1 answer:
Rashid [163]3 years ago
6 0

Answer:

The answer is D

Explanation:

Intrinsic value can be found by simply using the following formula

Put intrinsic value = Strike Price - Current selling price

this gives,

PIV = $45 - $50 = $-5

A put intrinsic value cannot be vegetative as it can be exercised right now at the current price. Thus it is interpreted as 0.

Time value is calculated as follows

Time Value = Option Price - Intrinsic Value

This gives   TV = $3.5 - $0 = $3.5

Hope this helps.

You might be interested in
The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this
Ilia_Sergeevich [38]

Answer:

In 2012, she earned $27.00 per hour, the price of a paperback novel was $9.00, and the price of a mandarin was $3.00. Which of the following give the nominal value of a variable? Check all that apply.

  • <u>The price of a mandarin is $3.00 in 2012.</u>

Nominal values are expressed in terms of current money. real variables are represented in terms of other goods or services.

Which of the following give the real value of a variable? Check all that apply.

  • <u>The price of a paperback novel is 3 mandarins in 2012.</u>

Nominal values are expressed in terms of current money. real variables are represented in terms of other goods or services.

Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Eleanor's wage has risen to $54.00 per hour. The price of a paperback novel is $18.00 and the price of a mandarin is $6.00. In 2017, the relative price of a paperback novel is <u>still 3 mandarins</u>.  

Between 2012 and 2017, the nominal value of Eleanor's wage <u>doubled</u>, and the real value of her wage <u>remained constant</u>.

Monetary neutrality is the proposition that a change in the money supply <u>affects</u> nominal variables and <u>does not affect</u> real variables.

4 0
3 years ago
Wesimann Co. issued 15-year bonds a year ago at a coupon rate of 7.5 percent. The bonds make semiannual payments and have a par
brilliants [131]

Answer:

$1,161.46

Explanation:

In order to determine the current bond price we can use an excel spreadsheet and the present value formula: =PV(Rate,Nper,PMT,FV)

where:

  • Nper = 14 x 2 = 28 (15 year bond issued 1 year ago = 14 years)
  • Rate = 5.8% / 2 = 2.9% (semiannual payments)
  • PMT = ($1,000 x 7.5%) / 2 = $37.50
  •  FV = $1,000 (face value of bonds)
  • PV = ?  

Current price =PV(Rate,Nper,PMT,FV) =PV(2.9%,28,37.50,1000) = $1,161.46

7 0
3 years ago
Which of the following transactions does not affect cash during a period? Group of answer choices Write-off of an uncollectible
jeyben [28]

Answer:

ehdhdhdhdhhdjdjdjdj

Explanation:

nxnxnxndnfjfnfjdjdjdhfhryyrhdhdhdhdjdjdjdjfhfhfjdjdj

3 0
3 years ago
Monica owns an equestrian clothing store. After many customers complained that her clothing only fit petite riders, she decided
Vanyuwa [196]

Answer:

Companies must be prepared at all times to add to or adapt their product lines to satisfy the desires of customers for them to remain competitive.

Explanation:

One of the strategies companies to remain competitive is to adjust to the demand of customers. This will allow a company to retain current customers and win potential new customers.

Although this strategy may require additional fund but failure to adapt and add new product lines that satisfy wants of the customers can the company out of business.

Therefore, companies must be prepared to add to or adapt their product lines to satisfy customers' desires in order to remain competitive.

6 0
3 years ago
A disadvantage of the corporate form of business ownership is that:
Roman55 [17]

Answer:

b) most shareholders have little direct control over how the company is managed.

4 0
3 years ago
Other questions:
  • True or false: economies of scale exist when expansion of the scale of production causes total production costs to increase more
    10·1 answer
  • As part of his job, joseph has been observing ipod users as they manipulate both the standard and multi-touch interface models a
    7·1 answer
  • Which of the following is correct with respect to rainy day funds? Multiple Choice Rainy day funds are classified as committed o
    8·1 answer
  • What is the policy used most by the Fed to change the money supply?
    14·1 answer
  • When preparing to go shopping after the Christmas holidays, Christy actively scans the ads in the local newspaper for coupons an
    15·1 answer
  • Which of the following statements is true about work hour regulations for 14 and 15-year-olds?
    6·1 answer
  • g reported pretax accounting income of $860 million for the current year. Depreciation reported in the tax return in excess of d
    11·1 answer
  • Warner Company has $196,000 of total fixed costs and sells products A and B with a product mix of 40% A and 60% B. Selling price
    12·1 answer
  • A company expects profits of $40,000 per year for 3 years. If the profits will be continuously invested in an account bearing 5.
    12·1 answer
  • which type of grant is often used by the national government to indirectly promote business development?
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!